How to Prepare for Your Upcoming Income Tax Filing


The arrival of 2024, a brand new year, means tax season is back again. So, it’s time to get organized for your annual income tax filing.

With a mountain of data to sift through, the process can feel overwhelming. But while it requires some time and effort, the process is likely less daunting than you might think.

Toward that end, here’s a brief outline to help you prepare for your impending 2023 income tax filing.

Gather + Organize Necessary Documents

Follow these steps to gather all relevant documents and organize them systematically to ensure you have everything you need:

Create a Checklist – Mark off all required documents, including W-2s, 1099s, receipts for deductible expenses, and any other relevant financial documents.

Sort by Category – Categorize your documents into groups, including income, deductions, credits, and investments. This ensures you have the specific information required to fill out different sections of your tax return.

Use Folders or Envelopes – Place grouped documents into separate folders or envelopes. Label them clearly to avoid confusion. And consider using color-coding to easily tell different categories apart.

Separate by Year – In some cases, you may need to reference documents spanning several. To differentiate, separate folders into individual sections for each tax year.

Keep a Tax Calendar – Note important dates on your calendar, including filing deadlines, any estimated tax payment due dates, and other important milestones.

Review Changes in Your Personal + Financial Situation

Here are some changes in your personal and financial situation that could impact your tax liability and eligibility for credits or deductions to consider in your filing preparation:

Update Personal Information – Changes in your marital status, dependents, or address must all be reported to the IRS.

Note Any Changes to Your Income – New income streams or changes to existing sources must be supported with the required documentation (W-2s, 1099s, etc.).

Life Events – Marriage, having a child, or buying a home can significantly impact your tax position and often require documents that must be included with your filing.

Review Potential Deductible Expenses – Make a list of deductible expenses and gather supporting documentation.

Review Investment Changes – Any investment changes, including capital gains or losses, dividends, and interest income, should be documented.

Retirement Contributions – Note any contributions or withdrawals from retirement plans.

Confirm Health Insurance Status – California requires residents to maintain health insurance coverage. And changes in your coverage, particularly if you’ve been laid off or moved to a new job with different coverage, can impact your healthcare-related tax obligations.

Consider Hiring a CPA

As your financial situation grows more complicated, it can become difficult to file your own income tax return. Here’s how hiring a CPA can help you minimize your tax liabilities and ensure compliance with tax laws.

Complex Financial Situation – If have multiple sources of income, an investment portfolio, or own a business, a CPA can help you navigate the intricacies of tax laws to ensure your income taxes are filed in accordance with the letter of the law.

Owning a Business – Filing income taxes as a business owner can be a complicated proposition. A knowledgeable CPA can help maximize your deductions, navigate business tax credits, and ensure compliance with tax laws.

Recent Life Changes – If you were recently married, divorced, had a child, or a death in the family, there could be significant changes to your tax situation. A CPA can help you understand how these changes impact your income tax filing.

Identifying and Correctly Applying Deductions and Credits – If you qualify for deductions or credits, whether related to education, energy efficiency, or foreign income, a CPA can help you maximize your potential benefits.

Saves Time – Even if you have the capacity to file your own taxes, you may not have enough time in your busy schedule. Meanwhile, hiring a CPA takes this burden off your shoulders and enables you to focus on other responsibilities.

Need Help Filing Your 2023 Income Tax Return?

From ensuring accurate filing to optimizing deductions and properly applying credits, working with a CPA offers huge peace of mind that far outweighs the expense.

If you have questions about the benefits of working with a CPA — Get in touch for a FREE consultation!


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